A company-wide approach for successfully implementing ESG
Environment, social, and governance (ESG) is becoming increasingly relevant for businesses globally. Improving ESG performance – the impact of operations on the safety and health of the workforce, the environment, and the surrounding communities – can directly lead to improved business performance and profitability.
However, research shows that many companies don’t focus on ESG because of the incorrect assumption that devoting the necessary time and resources to planning and operationalizing ESG measures are too costly. And one step further, another group of companies struggle with implementing and reaping the benefits from ESG initiatives.
Arturo Ania, global leader of agriculture and food & beverage at DuPont Sustainable Solutions in North America, and Katharina Uebele, a senior consultant at DuPont Sustainable Solutions in Europe, share three steps for companies to successfully embed ESG across their organization.
Successfully integrating ESG requires much more than simply a decision by company leadership and new policies for employees. It involves careful strategic and tactical planning, operational discipline, a committed company culture, and sustainable implementation if an organization is to achieve lasting benefits and competitive advantage.
DuPont Sustainable Solutions has developed a roadmap for organizations to follow and overcome the challenge. As one moves along the ESG excellence roadmap from envision and assessment, to operationalizing ESG impact, to sustaining and continuously improving ESG outcomes, there are three elements in particular that are critical to achieving successful and lasting ESG implementation.
1. Create a vision and culture to connect with employees
This entails a company culture where a common vision leads and unites personnel at all levels to commit to ESG improvements is essential for a successful implementation.
A clear vision on ESG to guide leadership and employees creates a connection and sense of inclusion among the organization. Furthermore, without a demonstrated and ongoing commitment to ESG by company leadership, employees won’t take the new initiative seriously. Therefore, leadership and management need to be enabled to reinforce the importance of ESG within the organization.
Training and engagement workshops across all levels should take place frequently. A careful and unified cultural implementation will lead to higher employee engagement, lower risk of non-compliance, and stronger organizational alignment.
Additionally to achieve desired ESG outcomes required for the cultural implementation, buyin and the establishment of the respective mindsets and behaviors among employees across the organization is critical. This management of change is achieved by taking steps to provide a clear understanding of the benefits of ESG to the company and, by extension, to individuals. This can be assisted by regularly capturing the employee’s perception via surveys and interviews.
Finally, it is important to take cultural implementation beyond the company walls and include various stakeholders. This requires establishing effective methods of communication of the company’s ESG goals with each stakeholder, who often have a different set of priorities and values, to get their understanding, acceptance, and eventual execution of necessary processes.
Bringing these stakeholders along a company’s journey to ESG excellence will enable them to build capabilities together along the value chain and achieve ESG improvements by acting together.
2. Assess current state & operational reality
An effective assessment requires a thorough examination of the current state and unique ESG risks facing the organization, as well as their potential impact on the ability of the company to continue normal operations.
Knowing the organizations risks is the first step to mitigate and increase resiliency of the business processes. This involves analyzing the broad range of potential threats to the organization, such as:
- Operational risks: resource and asset efficiency, potential environmental impacts of operations (e.g. waste and GHG emissions), and any possible impact on the safety of employees and surrounding communities.
- Supply chain risks: material sourcing, potential environmental impacts through transportation, and worker rights and safety along the supply chain
- The health and nutrition risks of products made by the company: potential negative impacts on consumers, including any potential contribution to obesity or other unhealthy impact
- Product quality and safety risks: quality of ingredients and potential product recalls
- Product labelling and marketing risks: potential exposure in controversial markets or risks associated with any health claims made about its products
- Packaging lifecycle risks: single-use packaging waste or packaging recycling
The risk of being held liable or found negligent for accidents or environmental damages that occur, even when a company acts prudently, should be considered, as well.
3. Effectively integrate ESG into operations to sustain improvements
Implementing ESG into a company’s operations requires fully integrating it among all existing processes.
Doing so will impact operational risk management and lead to higher performance. For example, in the area of process analysis, numerous ESG improvements are now possible that go far beyond simple heat recovery or known measures such as pump controls.
The greatest potential for benefit typically lies in process management. ESG can also lead to recognizable improvements in efficiency, from resource efficiency that results in reductions to physical waste (the volume of discarded resources and materials) to operational efficiency that results in optimal performance of processes, systems and equipment.
